Question

QUESTION 3:

(i) Define auditor independence

(ii) What is the difference between actual and perceived auditor independence.

(iii) Why is auditor independence important?

Answer 1

Auditor Independence-Definitions

Auditor is the person or group of person who audit the financial documents of the firm or person who execute the audit process for the firm or company.an Auditor should be independent from the internal and external parties.auditor independence can be define freedom or independence of the external auditor of the firm or company.the main characteristic of the independence of auditor is carry out his or her work freely to meet certain objectives with integrity

2. difference between actual and perceived auditor independence.

Independent audit can be classified as two

1.Actual audit or Audit in fact

2.Perceived independence or Independence in appearance

Actual independence is the Real independence to the auditor or Independence of mind of auditor.in a actual independence audit auditor have the free concern of mind and right to make independent or freedom to take decision based on audit report and Perceived auditor independence is refers to the belief of financial report users that actual independence has been achieved Even where actual independence has been maintained by the auditor. it may not be achieved due to confusion over the facts of the situation

3.why auditor independence is importance

An audit should be honest and unbiased.for the perfection of audit report auditor should be independent and free from external and internal parties.indipendace audit is the essential element for a good audit report.auditor independence give freedom to author so Auditor can be honest and he or she can prepare unbiased audit report